The economic survey tabled in the Lok Sabha days before the Union Budget predicts the economic growth in the current fiscal year to reach 7.0% from 6.8% for FY 19.
The Government’s economic survey states India will face challenges from the economic slowdown and its impact on tax collections amid rising expenditure on agriculture sector.
- The economic survey expects India’s GDP growth to be positive from the 6.8% last year, which was the most sluggish rate in 5 years.
- The report expects the rate of investment to grow on the back of expected increase in consumer demand and bank lending.
Major highlights from the Economic Survey:
Growth
- GDP growth rate is predicted to rise in FY 20 on the back of higher private investment and strong consumption.
- The growth rate for GDP in FY 20 is predicted at 7% year on year.
- Growth rate for agriculture, forestry and fishing sector in FY 19 stood at 2.9%.
- The survey expects lower global oil prices will boost consumption.
- Increasing uncertainty over trade tensions, and slowing global growth could hit exports.
Fiscal Deficit
- The fiscal deficit for FY 19 pegged at 3.4% of GDP.
- The Economic Survey forecasts fiscal deficit at 3% of GDP by FY 21 on the basis of revised glide path.
- Challenges on the fiscal front will be posed by slow growth, GST, and farm schemes.
- Apprehensions of slowing growth will impact revenue collections.
- Forex reserves for FY 19 stand at USD 412.9 billion, down from USD 424.5 billion in FY 18.
- Survey projects imports to grow at 15.4% while exports are slated at 12.5% in FY 19.
Inflation
- The Survey stated that average inflation in the last 5 years was less than the levels in the preceding 5 years, which matched the lowest levels post-independence in India’s history.
- Average core inflation was higher than FY 18.
- Food inflation was up in FY 19.
- Prices of pulses, vegetables and sugar saw deflation.
- Wage growth in rural economy which had fell, is on the rise since mid-2018.
